Vertel Reports Second Quarter 2000 Financial Results

Woodland Hills, Calif., July 31, 2000 – Vertel® (NASDAQ: VRTL), a leading provider of mediation software for telecommunications networks, today reported revenues of $5.3 million for the second quarter ended June 30, 2000 compared with $5.6 million for the second quarter of 1999 and $5.0 million for the first quarter of 2000. The company posted second quarter 2000 net income of $63,000, or $0.00 per share on both a basic and fully diluted basis, compared with a net loss of $1.8 million, or $0.07 per share, in the second quarter of 1999 and a net loss of $1.0 million, or $0.04 per share, for the first quarter of 2000.
Results in the second quarter were favorably impacted by a one-time gain of $961,000, recorded as other income, from the company's sale of its remaining equity interest in Systems Wizards, its former Italian distributor.
For the six months ended June 30, 2000, revenues were $10.3 million compared with $10.1 million for the same period in 1999. Vertel's year-to-date net loss was $1 million, or $0.04 per share, compared with a net loss of $3.2 million, or $0.13 per share, for the first six months of 1999.
"Second quarter results reflect continued improvement in our operations following the company's restructuring last October and expanded market interest in our e*ORB technology," said Cyrus D. Irani, president and chief executive officer of Vertel. "During the quarter we were able to close contracts for e*ORB with Dacom of Korea, Eastcom of China, ETRI of Korea and opt(e)way of France. We also closed a large contract with the U.S. Department of Defense (DoD) for a comprehensive package of Vertel software products which include Vertel Mediation Framework, e*ORB, CORBA-Services and TMN products. The DoD contract, along with an ongoing consulting contract from our Professional Services Unit with Alcatel, accounted for 35% and 14% respectively of this quarter's revenue.
"In addition, our e-commerce initiative is proving instrumental in increasing evaluations of e*ORB. The e*ORB software has been downloaded for evaluation more than 250 times from our website since the capability was introduced in April. Along with the telecommunications industry, we are also seeing continued interest in e*ORB from other industries.
"In the area of product development, we continue to hold discussions with both current and potential customers to ascertain their needs and have tailored our new product offerings accordingly. During the second quarter, we developed additional CORBA-Services software packages for Notification, Naming and Logging Services," added Irani.
"Going forward, Vertel will continue to explore strategic initiatives including our entry into the Application Service Provider (ASP) market. These initiatives along with our continued post-restructuring improvement in operations and performance, further market interest in the e*ORB technology and the recent realignment of our management team provide the basis for a favorable outlook in the year 2000 and beyond," concluded Irani.

Vertel's July 31 Conference Call Available on the Web

Vertel's Second Quarter Fiscal 2000 earnings release conference call with investors, to be held Monday, July 31, 2000, will be available over the Internet at 11:00 a.m. EDT/8:00 a.m. PDT through Vcall at www.vcall.com or on Vertel's website at www.vertel.com. To listen to the call, please go to either Web site at least 15 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available shortly after the call at the Vcall website.

About Vertel
Vertel is a leading provider of mediation software for telecommunications networks, enabling a variety of devices such as mobile devices to become an integral, intelligent part of a company's network topology. The company's pioneering mediation software, e*ORB(TM), is being adopted by top telecommunications, e-business and manufacturing companies. Vertel offers a variety of technologies and applications, supporting end-to-end network and service management with the highest quality of service for network operations. Vertel solutions are deployed worldwide by service providers, network operators, software vendors and systems integrators. Vertel also develops turnkey management applications that fit individual customer requirements through its Professional Services Unit. The company is based in Woodland Hills, Calif., and has sales offices throughout the world.
For more information on Vertel or its products, contact Vertel at 21300 Victory Boulevard, Suite 700, Woodland Hills, Calif. 91367; telephone: (818) 227-1400; fax: (818) 598-0047 or visit the Vertel Web site at http://www.vertel.com.

"Safe Harbor" Statements under the Private Securities Litigation Reform Act of 1995: Except for the historical information presented, the matters discussed in this news release are forward-looking statements. These statements should be evaluated together with the many risks and uncertainties that affect the company's business, including timely and successful development of products and technologies; successful introduction and customer acceptance of new and enhanced products and technologies in existing and new markets; the possibility that delays or difficulties will arise in implementing complex products and technologies and enabling them to work successfully with other complex products and technologies; the possible development and introduction of competitive products and new and alternative technologies; pricing, currency and exchange risks; governmental and regulatory developments affecting Vertel and its customers; the ability to identify, conclude, and integrate acquisitions on a timely basis; the ability to retain and attract key personnel; and other risks and uncertainties detailed from time to time in public disclosure filings with the U.S. Securities and Exchange Commission (SEC) by Vertel, including, but not limited to, the Annual Report on Form 10-K for the year ended Dec. 31, 1999, and the Quarterly Earnings Report on Form 10-Q for the quarter ended March 31, 2000.

VERTEL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)

                                                June 30,  December 31,
ASSETS                                            2000         1999

Current assets:
  Cash and cash equivalents                      $ 10,707    $  3,974
  Short-term investments                               --       5,677
  Trade accounts receivable (net of
   allowances of $541 as of June 30,
   2000 and $486 as of December 31, 1999)           6,958       6,289
  Prepaid expenses and other current assets         1,308         519
     Total current assets                          18,973      16,459

Property and equipment, net                         1,221       1,638
Investments                                         1,437       1,437
Goodwill, net                                       3,511       3,987
Other assets                                          307         306
                                                 $ 25,449    $ 23,827

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable                               $    403    $    931
  Accrued wages and related liabilities             1,804       1,672
  Capital lease obligations                            --          26
  Accrued restructuring expenses                       48         439
  Accrued taxes payable                               598         483
  Other accrued liabilities                         1,862       1,773
  Deferred revenue                                  1,018       1,621       
     Total liabilities                              5,733       6,945

Shareholders' equity:
  Preferred stock, par value $.01,
   2,000,000 shares authorized;
   none issued and outstanding
  Common stock, par value $.01,
   100,000,000 shares authorized;
   shares issued and outstanding:
   2000, 28,025,137;
   1999, 26,246,531                                   280         262
  Additional paid-in capital                       85,890      82,049
  Accumulated deficit                             (66,220)    (65,242)
  Accumulated comprehensive loss                     (234)       (187)
     Total shareholders' equity                    19,716      16,882
                                                 $ 25,449    $ 23,827



VERTEL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

                              Three Month               Six Month
                              Period Ended            Period Ended
                          June 30,    June 30,   June 30,     June 30,
                            2000        1999       2000         1999
Net revenues:
  License                $  3,524    $  3,602    $  6,435    $  6,764
  Service and other         1,757       2,000       3,857       3,360
     Net revenues           5,281       5,602      10,292      10,124

Cost of revenues:
  License                     255         421         478         991
  Service and other         1,361       1,497       2,775       2,911
     Total cost
      of revenues           1,616       1,918       3,253       3,902

Gross profit                3,665       3,684       7,039       6,222

Operating expenses:
  Research and
   development              1,389       2,180       2,842       3,843
  Sales and
   marketing                1,892       2,202       3,470       3,759
  General and
   administrative             957         938       2,053       1,731
  General and
   administrative
   - non-cash stock
   compensation               259          --         518         192
  Goodwill
   amortization               238         238         476         278
     Total                  4,735       5,558       9,359       9,803

Operating loss             (1,070)     (1,874)     (2,320)     (3,581)
Other income, net           1,173         143       1,423         392

Income (loss)
 before provision
 for income taxes             103      (1,731)       (897)     (3,189)
Provision for
 income taxes                  40          20          80          20
Net income (loss)              63      (1,751)       (977)     (3,209)
Other comprehensive
 income (expense)             (34)         38         (47)          8
Comprehensive
 income (loss)           $     29    $ (1,713)   $ (1,024)   $ (3,201)

Basic net income
 (loss) per
 common share            $   0.00    ($  0.07)   ($  0.04)   ($  0.13)

Diluted net
 income (loss)
 per common share        $   0.00    ($  0.07)   ($  0.04)   ($  0.13)

Weighted average
 shares outstanding
 used in net income
 (loss) per common
 share calculations:
    Basic                  27,853      25,354      27,422      25,280
    Diluted                31,608      25,354      27,422      25,280


Certain amounts have been reclassified for comparative purposes

Vertel Corp., Woodland Hills
Lynn Friederichs, 818.227.5735
E-mail: lynn-friederichs@vertel.com or 
Gordon Almquist, 818.227.5751
E-mail: gordon-almquist@vertel.com

or

The Financial Relations Board Inc., Los Angeles
Jim Crockett, 310.442.0599 (media)
E-mail: jcrocket@frb.bsmg.com